Leading chief economists have warned of a “substantial restructuring” of supply chains over the next three years, with both diversification and localisation expected.
“Global supply chains have been increasingly redrawn over the past years, including through Brexit, the deep impact of the global pandemic, and the fallout and uncertainty from the war in Ukraine,” the World Economic Forum’s Chief Economists Outlook said. “Amid fears of continued shocks, both governments and business are rethinking their approach to exposure, self-sufficiency and security in trade and production relationships.”
The briefing, published by the World Economic Forum’s Centre for the New Economy and Society, examines the latest policy developments and research in combination with consultations and surveys with leading chief economists from both the public and private sectors.
According to the findings of the report, at the current trajectory, the world is on track for the “worst food crisis in recent history”, compounded by the additional pressure of high energy prices. This is pushing more localisation, diversification, and politicisation of supply chains.
The chief economists surveyed for the report said that they consider it “likely or highly likely” that multinational companies will both diversify and localise their supply chains at the same time and that there will be a “realignment of global vSet featured imagealue chains along new geopolitical fault lines”.
“In the context of supply chain reconfiguration, companies are shifting from efficiency to resilience and are expected to prioritise localisation over diversification,” said the report.